How to apply for a mortgage in Spain

4th September 2024 · 3 min. read

If you are considering acquiring an exclusive property in Spain, whether for personal residence or as an investment, you may want to finance part of the purchase through a mortgage. While many buyers have enough liquidity to pay in cash, opting for a mortgage can be a convenient financial strategy, even for those with a high net worth.

A mortgage allows you to better manage your capital by spreading payments over time while taking advantage of other investment opportunities in assets that can generate attractive returns. Additionally, there are tax advantages that may make this option even more beneficial.

Before starting the process, here are some factors that major banks in Spain consider:

1. Demonstrating Stable Income and Solid Assets
   It is crucial for the applicant to demonstrate having consistent and substantial income. This may include annual income, business stability, or regular income streams from various sources of wealth, such as investments or established businesses.
2. Ratio Between the Requested Amount and the Provided Collateral
   The bank will assess whether your income and assets are sufficient to cover monthly payments, ensuring that the installments do not exceed 30% to 35% of your net monthly income. In addition to income, assets such as bank accounts, deposits, stocks, insurance policies, investment funds, artwork, jewelry, and the possible inclusion of additional guarantors if needed, will be evaluated.
3. Impeccable Credit History
   A flawless credit history is essential. Banks will review any outstanding debts to evaluate your borrowing capacity. In Spain, banks can access official records such as the Central Credit Register of the Bank of Spain (CIRBE), which details the applicant's credit status. Maintaining good financial management is key to obtaining a mortgage under optimal conditions.
4. Liquidity for the Down Payment and Associated Taxes
   In general, banks finance up to 80% of the property's value. Therefore, the buyer must contribute at least 20% of the price as a down payment. Additionally, an extra 12% to 15% will be needed to cover associated expenses such as taxes and other legal procedures.

For clients with a high financial profile, many banks offer premium mortgages with exclusive and personalized conditions. These terms may include preferential interest rates, flexible repayment periods, or additional benefits linked to other banking products.

For clients with a high financial profile, many banks offer premium mortgages with exclusive and personalized conditions. These terms may include preferential interest rates, flexible repayment periods, or additional benefits linked to other banking products.

For business owners:

• Corporate Tax for the previous year.
• Current year’s tax returns (VAT, Corporate Tax).
• Updated balance sheet and income statement.
• Articles of incorporation.

For employees:

• Tax identification number (NIF).
• Proof of income (pay stubs, rental income, etc.).
• Employment contract.
• Annual income tax return.
• Signed declaration of assets.

For self-employed individuals:

• Tax identification number (NIF).
• Proof of income (rental income, etc.).
• Annual income tax return.
• Signed declaration of assets.

Property documentation:

• Property deed registered in the Land Registry.
• Latest IBI (property tax) receipt.
• Certificate of being up to date with community expenses, if applicable.
• Purchase contract or deposit agreement.

At Christie's International Real Estate Madrid, we have a team of banking experts who will guide you throughout the entire process, from acquiring the property to obtaining the mortgage, ensuring a personalized, seamless experience tailored to your needs.